TY - JOUR AU - Muralidharan, Karthik AU - Niehaus, Paul AU - Sukhtankar, Sandip TI - Building State Capacity: Evidence from Biometric Smartcards in India JF - National Bureau of Economic Research Working Paper Series VL - No. 19999 PY - 2014 Y2 - March 2014 DO - 10.3386/w19999 UR - http://www.nber.org/papers/w19999 L1 - http://www.nber.org/papers/w19999.pdf N1 - Author contact info: Karthik Muralidharan Department of Economics, 0508 University of California, San Diego 9500 Gilman Drive La Jolla, CA 92093-0508 Tel: 858/534-2425 Fax: 858/534-7040 E-Mail: kamurali@ucsd.edu Paul Niehaus Department of Economics University of California, San Diego 9500 Gilman Drive #0508 La Jolla, CA 92093 Tel: 858/534-3190 Fax: 858/534-7040 E-Mail: pniehaus@ucsd.edu Sandip Sukhtankar Department of Economics University of Virginia Charlottesville, VA 22904 E-Mail: srs8yk@virginia.edu AB - Anti-poverty programs in developing countries are often difficult to implement; in particular, many governments lack the capacity to deliver payments securely to targeted beneficiaries. We evaluate the impact of biometrically-authenticated payments infrastructure ("Smartcards") on beneficiaries of employment (NREGS) and pension (SSP) programs in the Indian state of Andhra Pradesh, using a large-scale experiment that randomized the rollout of Smartcards over 158 sub- districts and 19 million people. We find that, while incompletely implemented, the new system delivered a faster, more predictable, and less corrupt NREGS payments process without adversely affecting program access. For each of these outcomes, treatment group distributions first-order stochastically dominated those of the control group. The investment was cost-effective, as time savings to NREGS beneficiaries alone were equal to the cost of the intervention, and there was also a significant reduction in the "leakage" of funds between the government and beneficiaries in both NREGS and SSP programs. Beneficiaries overwhelmingly preferred the new system for both programs. Overall, our results suggest that investing in secure payments infrastructure can significantly enhance "state capacity" to implement welfare programs in developing countries. ER -